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California employers allowed to round employee time to nearest one-tenth of an hour for calculating overtime

In a case of first impression, a California court of appeal ruled that employers may round nonexempt employee time to the nearest one-tenth of an hour for purposes of calculating overtime pay. In See's Candy Shops, Inc. v. Superior Court (Silva), plaintiffs filed a class action lawsuit alleging that See's Candy's timekeeping policy violated California law by rounding employees' in and out times to the nearest one-tenth of an hour. Although there is no California law expressly permitting such a rounding policy, the court adopted the federal Department of Labor FLSA regulation – which does permit time rounding to the nearest five minutes, one-tenth of an hour, or quarter of an hour – as the appropriate standard in California.

The court also noted that the California DLSE Enforcement Policies and Interpretations Manual approved of the federal regulation. Although the DLSE Manual is not binding on courts, the court found the language persuasive guidance concerning California law. Accordingly, the court held that a California "employer is entitled to use the nearest-tenth rounding policy if the rounding policy is fair and neutral on its face and ‘it is used in such a manner that it will not result, over a period of time, in failure to compensate the employees properly for all the time actually worked.'" In similar fashion, California employers should continue to be able to round to the nearest five minutes or quarter of an hour.

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